Brian Shaw, chief executive, said the deal would provide the group with the fund management expertise it would need to compete in the stakeholder pensions market. Glasgow-based Britannia Asset Management has a strong investment record and enjoys good relationships with the independent financial adviser (IFA) sector and the employee benefits consultants who play a crucial role in the awarding of pensions mandates.
At the same time, Britannic has entered into a tied distribution agreement with Britannia giving it exclusive access to the society's network of 180 branches and 120 financial advisers. "At a not huge cost, it has added to our strategic capability hugely," Mr Shaw said.
Britannic is paying pounds 150m for 75 per cent of Britannia Asset Management, including a pounds 30m clawback provision if revenue targets are not met. The BAM buy will be funded by a pounds 150m loan from NatWest bank. Britannic is buying Britannia's life insurance business for pounds 196m, funded from Britannic's life fund.
Mr Shaw said that the group, which has been linked repeatedly as a potential merger partner for United Assurance, would not rule out further deals in the life insurance sector.
Britannic plans to transfer its own investment business to BAM in Glasgow, which is being renamed Britannic Asset Management. Britannic shares rose 35p to close at 1,040p.